Why We Care

Why We Care

HUD Issues NHTF Allocation Plan Guidance

May 02, 2016

The long-awaited NHTF Allocation Plan guidance from HUD was posted as Notice CPD-16-07 on April 28. The seven-page Notice primarily restates the interim regulations, with a few exceptions.

The statute creating the NHTF requires that each state, the District of Columbia, and Puerto Rico select a state entity, such as a housing finance agency or housing department, to receive NHTF money and administer the state’s NHTF program. Late last week HUD posted the final two state designations on its NHTF webpage. The statute also requires that these designated entities draft a NHTF Allocation Plan, notify the public about it and provide for public comment – all following Consolidated Plan (ConPlan) public participation regulations.

The statute requires states to give priority in awarding NHTF money to applicant organizations based on six factors. One of those factors is geographic diversity. The Notice goes beyond the interim rule for geographic diversity by adding, “The state’s geographic distribution priorities must be consistent with the state’s certification that it will affirmatively further fair housing and any applicable Analysis of Impediments.” Unfortunately, HUD’s guidance does not help states concerned about how to comply with the geographic diversity requirement given that their 2016 NHTF allocation will likely be very modest (NLIHC estimates that most states will be receiving close to $3 million).

Another one of the six priority factors is the length of time a NHTF-assisted unit will remain affordable. The Notice goes beyond the interim rule by adding, “The funding priority in the NHTF allocation plan should consider how project underwriting supports the financial feasibility of the project beyond the required 30-year period.”

For states that have already submitted their ConPlan Annual Action Plan, Notice CPD-16-07 indicates that those states must submit their NHTF Allocation Plan as an amendment to the state’s ConPlan Annual Action plan no later than August 16. Treatment of the NHTF Allocation Plan as simply an amendment to the ConPlan Annual Action Plan seems to contradict two previous HUD FAQs (see http://bit.ly/1T8kBu1 and Memo, 6/29/15, 8/31/15) issued last summer that stated the NHTF Allocation Plan would have to be a “substantial amendment” to the Annual Action Plan. A substantial amendment triggers a required 30-day review and comment period, while an amendment does not. Advocates must ensure their state has at least a 30-day review and comment period even if the NHTF Allocation Plan is not considered a substantial amendment.

Notice CPD-16-07 directs states to revise the affordable housing section of the five-year Strategic Plan portion of their ConPlan. The revision must include specific objectives that describe the proposed housing accomplishments the state plans to achieve and specify the number of extremely low income families, as defined in the NHTF rule, for whom it will provide affordable housing over a specific period of time. For each objective, the state must identify proposed accomplishments and outcomes in quantitative terms. While this has been standard language in the ConPlan rule, many state ConPlans have not indicated how many extremely low income households they intend to assist with affordable housing. Advocates need to monitor their state’s compliance with this long-standing ConPlan regulation as it affects not only the NHTF but other federal, state, and local resources.